Question 1

Given a downward sloping demand curve and an upward sloping supply curve for product X, an increase in the price of a substitute good (in consumption) will:

Accepted Answer

An increase in the price of a substitute good makes product X relatively cheaper, leading to an increase in demand for product X. This shifts the demand curve to the right, resulting in a higher equilibrium price and quantity for product X.

Question 2

When an economy achieves both allocative and productive efficiency, it implies that there is:

Accepted Answer

When an economy achieves both allocative and productive efficiency, it implies that resources are being used in the most efficient way possible, meaning that the economy is producing at its full production potential. Allocative efficiency ensures that resources are distributed in a way that maximizes societal welfare, while productive efficiency means that goods are produced at the lowest possible cost.

Question 3

If an economy produces its most wanted goods but uses outdated production methods, it is:

Accepted Answer

Outdated production methods imply that the economy is not using the most efficient techniques to produce goods. Therefore, it cannot achieve productive efficiency, as it is not producing goods using the least-cost method of production. However, we cannot determine whether allocative efficiency is achieved or not with the information given.

Question 4

Productive efficiency refers to:

Accepted Answer

Productive efficiency refers to the use of the least-cost method of production, where resources are used in the most efficient way possible to produce goods and services at the lowest possible cost. It is one of the two types of economic efficiency, the other being allocative efficiency.

Question 5

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n):

Accepted Answer

A decrease in the supply of gasoline and an increase in the demand for gasoline would cause gasoline prices to be higher.

Question 6

A headline reads "Soccer is the new popular sport among youth." In a competitive market, this situation would lead to a(n):

Accepted Answer

An increase in popularity of soccer among youth would likely lead to higher demand for soccer-related products, including soccer shoes. In a competitive market, this increased demand would typically result in both higher prices and a greater quantity of soccer shoes sold, as suppliers respond to the demand.

Question 7

To realize "full production" a society must achieve:

Accepted Answer

Full production requires both allocative efficiency, which means producing the right combination of goods and services that best satisfy society's wants and needs, and productive efficiency, which means producing goods and services using the least amount of resources possible. Income inequality and producing any output lying inside the production possibilities curve do not necessarily indicate full production. Productive efficiency alone is not enough to achieve full production if the wrong combination of goods and services is being produced. Therefore, only choice C, which requires both allocative and productive efficiency, represents full production.

Question 8

In the corn market, demand often exceeds supply and supply sometimes exceeds demand"."The price of corn rises and falls in response to changes in supply and demand.In which of these two statements are the terms "demand" and "supply" being used correct

Accepted Answer

The answer of In the corn market, demand often exceeds...

Question 9

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.Refer to the above.An increase in the price of a product which is a close substitute for X will:

Accepted Answer

An increase in the price of a close substitute for product X makes X more attractive to consumers, leading to an increase in demand (D) for X. This increased demand, with supply remaining constant, results in a higher equilibrium price (P) and a higher equilibrium quantity (Q) sold.

Question 10

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in demand may have been caused by:

Accepted Answer

An increase in demand at every price level is indicated by a shift to the right in the demand curve. This shift could be caused by an increase in incomes, especially if the product is a normal good, which means that as income increases, demand for the product also increases. A decline in the number of buyers in the market (option A) or a decline in the price of a substitute good (option B) would cause a shift to the left in the demand curve, representing a decrease in demand at every price level. An increase in incomes would not cause a shift to the left in the demand curve (option D) because it would still lead to an increase in demand at every price level.

Question 11

Refer to the graph below.The graph shows the market for a good.  Identify a correct statement about the market.

Accepted Answer

The answer of Refer to the graph below.The graph shows...

Question 12

An "increase in efficiency" suggests that an economy:

Accepted Answer

An increase in efficiency means that an economy is able to produce more output with the same amount of inputs. This is represented by an upward shift of the production possibilities curve, which means the economy can produce more of both goods or services.

Question 13

You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.Refer to the above.An increase in income, if X is a normal good, will:

Accepted Answer

An increase in income, if X is a normal good, will lead to an increase in demand (D) for X, as consumers have more purchasing power. This will in turn lead to an increase in the equilibrium price (P) of X, as suppliers are able to charge a higher price due to the increased demand. The equilibrium quantity (Q) of X will also increase, as suppliers will be willing and able to supply more units of X at the higher price.

Question 14

With allocative efficiency:

Accepted Answer

Allocative efficiency is achieved when resources are allocated in a way that produces the combination of goods and services most wanted by society. In other words, it is the efficient production of the "right" mix of goods and services. Therefore, option D is the correct choice. Options A and B are incorrect because allocative efficiency does not depend on the state of technology or the quantity and quality of the factors of production. Option C is partially correct, but it does not capture the essence of allocative efficiency, which is centered on producing the goods and services that best satisfy the wants and needs of society.

Question 15

Assuming an economy has fixed quantities of resources, that economy:

Accepted Answer

An economy with fixed quantities of resources becomes more efficient as it increases the amount of goods and services it produces, because it implies a better utilization of the available resources. Efficiency in this context means maximizing output from the given resources. Choices B, C, and D are incorrect because fixed resources do not guarantee satisfaction of all consumer wants, efficient use of resources can affect output levels, and the choice of production technologies can impact the amount of output produced.

Question 16

A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n):

Accepted Answer

The switch from videotapes to DVDs indicates a decrease in demand for videotapes. In a competitive market, a decrease in demand leads to a lower equilibrium price and quantity sold.

Question 17

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market:

Accepted Answer

The answer of  Refer to the above diagram, in...

Question 18

Because of their scarcity, the efficient use of resources is:

Accepted Answer

The efficient use of resources is always an important issue in any economy because resources are scarce and need to be managed in the best possible way to meet the needs of individuals and society as a whole.

Question 19

The concept of economic efficiency is primarily concerned with:

Accepted Answer

Economic efficiency is concerned with maximizing output or outcomes from available resources. It involves minimizing waste and ensuring that resources are allocated in the most productive manner possible to achieve the greatest benefit. It is not concerned with issues of equity or conservation of natural resources, although these may be considered important in their own right.

Question 20

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in supply may have been caused by:

Accepted Answer

The fact that the supply curve has shifted to the right (from S₁ to S₂) indicates that suppliers are now able to produce and offer more of the good at any given price. This increase in supply could be due to the adoption of more efficient machinery or technology, which would lower the costs of production and thereby increase the quantity of the good that suppliers would be willing and able to offer. None of the other options (an increase in wages for workers, a decrease in fashionability, or an increase in consumer incomes) would directly affect the costs of production and supply in the same way.

Quiz 3: Part B: Demand, Supply, and Market Equilibrium

Given a downward sloping demand curve and an upward sloping supply curve for product X, an increase in the price of a substitute good (in consumption) will:

When an economy achieves both allocative and productive efficiency, it implies that there is:

If an economy produces its most wanted goods but uses outdated production methods, it is:

Productive efficiency refers to:

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n) :

A headline reads "Soccer is the new popular sport among youth." In a competitive market, this situation would lead to a(n) :

To realize "full production" a society must achieve:

In the corn market, demand often exceeds supply and supply sometimes exceeds demand"."The price of corn rises and falls in response to changes in supply and demand.In which of these two statements are the terms "demand" and "supply" being used correct

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in demand may have been caused by:

Refer to the graph below.The graph shows the market for a good. Identify a correct statement about the market.

An "increase in efficiency" suggests that an economy:

With allocative efficiency:

Assuming an economy has fixed quantities of resources, that economy:

A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n) :

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market:

Because of their scarcity, the efficient use of resources is:

The concept of economic efficiency is primarily concerned with:

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in supply may have been caused by:

Quiz 3: Part B: Demand, Supply, and Market Equilibrium

Given a downward sloping demand curve and an upward sloping supply curve for product X, an increase in the price of a substitute good (in consumption) will:

When an economy achieves both allocative and productive efficiency, it implies that there is:

If an economy produces its most wanted goods but uses outdated production methods, it is:

Productive efficiency refers to:

A headline reads "Gasoline Prices Are Higher." A likely explanation for this event would be a(n) :

A headline reads "Soccer is the new popular sport among youth." In a competitive market, this situation would lead to a(n) :

To realize "full production" a society must achieve:

In the corn market, demand often exceeds supply and supply sometimes exceeds demand"."The price of corn rises and falls in response to changes in supply and demand.In which of these two statements are the terms "demand" and "supply" being used correct

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in demand may have been caused by:

Refer to the graph below.The graph shows the market for a good. Identify a correct statement about the market.

An "increase in efficiency" suggests that an economy:

With allocative efficiency:

Assuming an economy has fixed quantities of resources, that economy:

A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n) :

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market:

Because of their scarcity, the efficient use of resources is:

The concept of economic efficiency is primarily concerned with:

Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves.In this market the indicated shift in supply may have been caused by:

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in demand may have been caused by:

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market:

Refer to the above diagram, in which S₁ and D₁ represent the original supply and demand curves and S₂ and D₂ the new curves.In this market the indicated shift in supply may have been caused by: